• by Sarah Mahoney  @mahoney_sarah, November 2, 2022

There are plenty of reasons for beauty marketers to fret in the coming weeks, between consumer cutbacks and a downbeat financial report from Estee Lauder. But a new forecast from NPD Group predicts resilience in the category.

Of the 14 discretionary U.S. retail spending categories tracked by the market researcher, prestige beauty is the only one still growing in unit sales, which are double-digit.

The resilience is remarkable, particularly as unit sales of mass beauty products are slipping, writes Larissa Jensen, NPD’s vice president, beauty industry advisor, in her recent report on the category.

And she’s optimistic about the holiday season, citing what NPD calls the “beauty index,” looking at a bigger scale than lipsticks or fragrance.

“Regardless of which company or poll has been measuring it, U.S. consumer sentiment has unanimously been trending downward all year,” she says. “The beauty index supposes that when sentiment is low, the desire to treat oneself goes up, and NPD has observed the impact of consumers treating themselves across all prestige beauty categories throughout 2022.”

NPD's recent research on purchase intentions found that 28% of respondents plan to make a beauty purchase this season, level with years past.

Jensen also thinks sales will benefit as more people shop in stores, which has a higher rate of impulse purchasing and “I deserve a little treat” spending. She notes that prestige shoppers typically have a household income of $100,000. Those in the $150,000-plus category will likely splurge on gifts for themselves. And while higher-income consumers certainly aren’t immune to financial worries, they are more resilient.

Still, these prediction comes amid some gloomier news.

Estée Lauder reports that sales in the first quarter of its fiscal year sank 11% to $4.39 billion, and predicts more weakness in the coming quarter. Net earnings fell to $489 million, compared to $692 million in the prior-year period.

Much of the pressure came from China, where widespread COVID-19 shutdowns impacted sales more than expected, along with the impact of a strong U.S. dollar. As a result, Lauder is lowering its forecast for the full year ahead.

That said, it’s seeing much of the same resilience that NPD mentions. Sales of fragrance and hair products rose in the double digits., and “makeup’s renaissance continued to realize its promise in markets reopening,” it said in its announcement.

A total of 13 of Lauder's brands achieved organic growth, including M·A·C, La Mer, Jo Malone London and Aveda.

And it still sees sales gains accelerating later in the year: “Our optimism in the long-term growth opportunities for our brands and for prestige beauty remains intact.”